both got an "a," second choice for both men was an "f." >> next debate, vice presidential debate on thursday, october 11th. next presidential debate, tuesday, october 16th. nice glasses. >> like yours as well. >> e. up next, an encore presentation of tonight's debate. excellent glasses. very good. like those glasses. good evening from the university of denver in denver, colorado. i'm jim lehrer of the "pbs news hour" i welcome you to the first of the presidential debates between president barack obama and former massachusetts governor mitt romney the republican nominee. this debate and the next three, two presidential, one vice presidential are sponsored by the commission on presidential debates. tonight's 90 minutes will be about domestic issues and will

follow a format designed by the commission. there will be six roughly 15 minute segments, then open discussion for the remainder of each segment. thousands of people offered discussion suggestions. i made the final selections. for the record they were not submitted for approval to the commission or the candidates. the segments as i announced in advance will be three on the economy and one each on health care, the role of government and governing. with an emphasis throughout on differences, specifics and choices. both candidates will also have two minute closing statements. the audience here in the hall has promised to remain slinlt. no cheers, applause, boos, hisss

among other noisy distracting things so we may all concentrate on what the candidates have to say. there is a noise exception right now, though, as we welcome president obama. and governor romney. [ applause ] >> jim. >> gentlemen, welcome to you both. let's start with the economy. segment one, and let's begin with jobs. what are the major differences between the two of you about how you would go about creating new jobs?

you have two minutes. each of you have two minutes to start. a coin toss determined, mr. president, you go first. >> thank you very much, jim, for this opportunity. i want to thank governor romney and the university of denver for your hospitality. there are a lot of points i want to make tonight, but the most important one is, 20 years ago i became the luckiest man on earth because michelle obama agreed to marry me. i want to wish you happy anniversary, and a year from now, we won't celebrate it in front of 40 million people. four years ago, we went through the worst financial crisis since the great depression. millions of jobs were lost, the auto industry was on the brink of collapse, the financial system had frozen up. and because of the resilience and the determination of the american people, we've begun to fight our way back. over the last 30 months, we've seen 5 million jobs in the private sector created.

the auto industry has come roaring back and housing has begun to rise. but we all know that we still have a lot of work to do. and so the question here tonight is not where we've been, but where we're going. governor romney has a perspective that says if we cut taxes skewed toward the wealthy and roll back regulations, we'll be better off. i have a different view. i think we have to invest in education and training. i think it's important for us to develop new sources of energy here in america. that we change our tax code to make sure that we're helping small businesses and companies that are investing here in the united states. that we take some of the money that we're saving as we wind down two wars, to rebuild america. and that we reduce our deficit in a balanced way that allows us to make critical investments. now, it ultimately is going to be up to the voters, to you,

which path we should take. are we going to double down on the top down economic policies that helped get us into this mess? or do we embrace a new economic patriotism, that says america does best when the middle class does best? i'm looking forward to having that debate. >> governor romney, two minutes. >> thank you, jim. an honor to be with you and pleased to be with the president. i'm pleased to be at the university of denver, i appreciate the welcome and the presidential commission on these debates. and congratulations to you, mr. president, on your anniversary. i'm sure this is the most romantic place you could imagine, here with me. this obviously is a tender topic. i've had the occasion of meeting people across the country. i was in dayton, ohio and a woman grabbed my arm and said i've been out of work since may. can you help me? and yesterday was at a rally in denver and a woman came up to her with a baby in her arms and said, ann, my husband has had four jobs in three years,

part-time jobs. he's lost his most recent job, and we've now just lost our home. can you help us? the answer is, yes, we can help, but it's going to take a different path. not the one we've been on, not the one the president describes as a top-down, cut taxes for the rich. that's not what i'm going to do. my plan has five basic parts. one, get us energy independence, north american energy independent which creates about 4 million jobs. number two, open up more trade, particularly in latin america. crack down on china, if and when they cheat. number three, make sure our people have the skills they need to succeed and the best skills schools notice world. we're far away from that now. and number four, get to us a balanced budget. number five, champion small business. it's small business that creates the jobs in america. and over the last four years, small business people have decided that america may not be the place to open a new business. because new business startups are down to a 30-year low. i know what it takes to get small business growing again.

to hire people. now, i'm concerned that the path we're on has just been unsuccessful. the president has a view very similar to the view he had when he ran four years ago, that a bigger government, spending more, taxing more, regulating more, if you will trickle down government would work. that's not the right answer for america. i'll restore the vitality that gets america working again. thank you. >> mr. president, please respond directly to what the governor just said about trickle down. his trickle down approach. he said yours is. >> let me talk specifically about what i think we need to do. first, we need to improve our education system and we've made enormous progress drawing on ideas both from democrats and republicans that are already starting to show gains in some of the toughest to deal with schools. we have a program called race to the top that has prompted reforms in 46 states around the country.

raising standards, improving how we train teachers. so now i want to hire another 100,000 new math and science teachers. and create two million more slots in our community colleges so people can get trained for the jobs that are out there right now. and i want to make sure we keep tuition low for our young people. when it comes to our tax code, governor romney and i both agree our corporate tax rate is too high, so i want to lower it, particularly for manufacturing, taking it down to 25%. i also wants to close those loopholes that are giving incentives for companies that are shipping jobs overseas. i want to provide tax breaks for companies that are investing here in the united states. on energy, governor romney and i both agree we need to boost american energy production. and oil and natural gas production are higher than they've been in years. but i also believe that we have

to look at the energy sources of the future, like wind, solar and biofuels. and to make those investments so all this is possible -- now, in order for to us do it, we have to close our deficit, and one of the things we've been discussing tonight, how do we deal with our tax code and make sure we are reducing spending in a responsible way and how do we have enough revenue in those investments? this is a difference, because governor romney's central economic plan calls for a $5 trillion tax cut in addition to $1 trillion extension of the tax cuts, and military tax cuts. how do we pay for that, reduce the deficit, without dumping those costses on to middle class americans i think is one of the central questions of this campaign.

both of you have spoken about a lot of different things, we'll try to get through them as specific a way as we possibly can.

but first, governor romney, do you have a question you would like to ask the president directly about something he just said? >> sure, i would like to clear up the record and go through piece by piece. first of all, i don't have a $35 trillion tax cut. i don't have a tax cut of the you scale you're talking about. i think we ought to provide tax relief to people in the middle class. but i won't reduce the share of tax paid by high-income people. high-income people are doing just fine in this economy. they'll do fine whether you're president or i'm president. the people who are having a hard time right now are middle income americans, under the presses's policies, middle income americans have been buried, they're just being crushed. middle income americans have seen income come down by $4,300 this is a tax in and of itself. i'll call it the economic tax. it's been crushing. the same time, gasoline prices have doubled under the president, electric rates are up, food prices are up. health care costs have gone up by $2,500 a family. middle income families are being crushed, and the question is, how to get them going again.

and i've described it. it's energy and trade. the right kind of training programs, balancing our budget and helping small business. those are the cornerstones of my plan, but the president mentioned a couple other ideas, and i'll note, first education. i agree, education is key, particularly the future of our economy, but our training programs right now, we have 47 of them housed in the federal government reporting to eight different agos, overhead is overwhelminging. we have to get the dollars back to the states and go to the workers so they can create their own pathways to create jobs that will really help them. the second area, taxation, we ought to bring the tax rates down. i do both for corporate and individuals. but i also lower deductions, credits, exemptions, so you take in the same money for growth. the third area, energy. energy is critical. and the president pointed out

correctly that the production of oil and gas in the u.s. is up. but not due to his policies. in spite of his policies. mr. president, all of the increase in natural gas and oil has happened on private land. not on government land. on government land, your administration has cut the number of permits and licenses in half. if i'm president, i'll double them. and also get the oil from offshore and alaska, and i'll bring that pipeline in from canada, and by the way, i like coal. i'm going to make sure we can continue to burn clean coal. people in the coal industry feel like it's getting crushed by your policies. i want to get america and north america energy independent so we can create those jobs, and finally with regard to the tax cut, look, i'm not looking to cut massive taxes and to reduce the revenues going to the government. my number one principle is, there will be no tax cut that adds to the deficit. i want to underline that no tax cut that will add to the deficit. i want to reduce the burden being paid by middle income

americans, and to do that, that also means i cannot reduce the burden paid by high-income americans. any language to the contrary is simply not accurate. >> mr. president. >> well, i think that -- let's talk about taxes, because i think it's instructive. four years ago when i stood on this stage, i said that i would cut taxes for middle class families. and that's exactly what i did. we cut taxes for middle class families by about $3,600. and the reason is, because i believe we do best when the middle class is doing well. and by giving them those tax cuts, they had a little more money in their pocket. maybe they can buy a new car, they are certainly in a better position to weather the extraordinary recession we went through. they can buy a computer for their kid, going off to college. which means they are spending more money, businesses have more customers, make more profits and

hire more workers. now, governor romney's proposal that he's been promoting for 18 months, calls for a $5 trillion tax cut on top of $2 trillion of additional spending for our military. and he is saying that he is going to pay for it by closing loopholes and deductions, the problem is, he's been asked over 100 times how you would close those deductions and loopholes and he hasn't been able to identify them. i had make an important point here, jim. >> all right. >> when you add up all the loopholes and deductions that upper income individuals can -- are currently taking advantage of, take those all away, you don't come close to paying for $5 trillion in tax cuts and $2 trillion in additional military spending. and that's why independent studies looking at this said the only way to meet governor romney's pledge of not reducing the deficit, or not adding to the deficit is by burdening middle class families, the

average middle class family with children would pay about $2,000 more. now, that's not my analysis, that's the analysis of economists who have looked at this. and that kind of top-down economics where folks at the top are doing well, so the average person making $3 million is getting a $250,000 tax break while middle class families are burdened further, that is not whey believe is a recipe for growth. >> what is the difference. >> well, if i -- >> let's just stay on taxes for a moment. what is the difference? >> virtually everything he said about my tax plan is inaccurate. if the tax plan he described were a tax plan i was asked to support, i would say absolutely not. i'm not looking for a $5 trillion tax cut. what i've said is i won't put in place a tax cut that adds to the deficit. that's part one. so there's no economist that can say mitt romney's tax plan adds $5 trillion, if i say i will not add to the deficit with my tax plan. number two, i won't reduce the share paid by high-income individuals.

i know you and your runningmate keep saying that. i know it's a popular thing to say with a lot of people, and it's not the case. look, i have five boys, i'm used to people saying something that isn't always true and keep on saying it hoping ultimately i will believe it. that is not the case. i will not reduce the taxes paid by high income americans. and number three, i will not under any circumstances raise taxes on middle income families. i will lower taxes on middle income families. you cite a study, there are six other studies that look at that study and say it's completely wrong. i saw a study that says you will raise taxes by 3,000 to 4,000 dollars on middle income families. throw all these studies down there. i want to bring the rates down at the same time we lower deductions and exemptions and credit and so forth, so we keep getting the revenue we need. why lower the rates? the reason is, because small business pays that individual rate.

54% of america's workers work in businesses that are taxed not at the corporate tax rate, but at the individual tax rate. and if we lower that rate, they will be able to hire more people. for me, this is about jobs. this is about getting jobs for the american people. >> yeah, do you challenge what the governor just said about his own plan? >> well, for 18 months he's been running on this tax plan. and now, five weeks before the election he's saying that his big, bold idea is, never mind. and the fact is that if you are lowering the rates the way you describe, governor, then it is not possible to come up with enough deductions and loopholes that only effect high-income individuals to avoid raising the deficit or burdening the middle class. it's math. it's arithmetic. now, governor romney and i do

share a deep interest in encouraging small business growth. at the same time my plan has lowered taxes for 98% of families, i also lowered taxes for small businesses 18 times, and what i want to do, is continue the tax rates, the tax cuts that we put into place, for small businesses and families. but i have said for incomes over $250,000 a year, we should go back to the rates we had when bill clinton was president, when we created 23 million new jobs, went from deficit to surplus, and created a whole lot of millionaires to boot. the reason this is important is because by doing that, we can not only reduce the deficit, not only encourage job growth through small businesses but we're also able to make the investments that are necessary in education or in energy. and we do have a difference, though, when it comes to definitions of small business. under my plan, 97% of small

businesses would not see their income taxes go up. governor romney says, well, those top 3%, they're the job creators they would be burdened. but under governor romney's definition, there are a whole bunch of millionaires and billionaires that are small businesses. donald trump is a small business. i know donald trump doesn't like to think of himself as small anything, but that's how you define small businesses if you're getting business income. that kind of approach i believe will not grow our economy, because the only way to pay for it without either burdening the middle class or blowing up our deficit is to make drastic cuts in things like education, making sure that we are continuing to invest in basic science and research, all of the things help willing america grow. and i think that would be a mistake. that was ups. and who called ups? you did, bob. i just asked a question.

it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know. stay top of mind with customers? from deals that bring them in with an offer... to social media promotions that turn fans into customers... to events that engage and create buzz... to e-mails that keep loyal customers coming back, our easy-to-use tools will keep you in front of your customers. see what's right for you at constantcontact.com/try.

all right. >> jim, let me come back on the point. >> just for the record -- excuse me, just so everybody understands. we are way over our first 15 minutes. >> that's fun, season the it? >> that's good. >> great, no problem. >> if you don't have a problem, i don't have a problem, we're still on the economy, we'll come back to taxes, i want to move on to the deficit and a lot of other things too. okay. but go ahead, sir. >> mr. president, you are absolutely right, with regard to 97% of the businesses they're not taxed at the 35% tax rate, they're taxed at a lower rate. the businesses in the last 3% of businesses happen to employ half -- half of all people that

work in small business. they employ one-quarter of all workers in america, and you want to take their tax rate from 35% to 40%. i talked to a guy with a very small business, he's in the electronics business in st. louis. he has four employees. he said he and his son calculated how much they pay in taxes, federal income tax, federal payroll tax, state sales tax, state property tax, gasoline tax, it added up to well over 50% of what they earned. and your plan is to take the tax rate on successful small businesses from 35% to 40%. the national federation of independent businesses says that will cost 700,000 jobs. i don't want to cost jobs. my priority is jobs. and so what i do, i bring down the tax rates, lower deductions and exemptions, the same idea by behind bowles-simpson, by the way, get the rates down, lower exemptions and create jobs. there's nothing better to get us to a balanced budget than having

more people working, earning more money, paying more taxes. that's by far the most effective and efficient way to get this budget balanced. >> jim, you may want to move on to another topic. i would say this to the american people. if you believe we can cut taxes by $5 trillion and add $2 trillion of additional spending that the military is not asking for, $7 trillion to give you a sense, over ten years that's more than our entire defense budget. and you think that by closing loopholes and deductions for the well to do, somehow you will not end up picking up the tab, then governor romney's plan may work for you. but i think math, common sense, and our history shows that's not a recipe for job growth. look, we've tried this. we've tried both approaches. the approach that governor romney is talking about is the same sales pitch made in 2001 and 2003.

and we ended up with the slowest job growth in 50 years. we ended up moving from surplus to deficits, and it all culminated in the worst financial crisis since the great depression. bill clinton tried the approach i'm talking about. we created 23 million new jobs, we went from deficit to surplus, and businesses did very well. so in some ways we've got some data on which approach is more likely to create jobs and opportunity for americans, and i believe that the economy works best when middle class families are getting tax breaks so they've got money in their pockets, and those of us who have done extraordinarily well because of this magnificent country that we live in, that we can afford to do a little more to make sure we're not blowing up the deficit. >> jim, the president began this segment so i think i get the last word. >> you'll get the first word in the next segment.

>> he gets the first word in this segment, i get the last word i hope. >> that's okay. >> let me repeat what i said, i'm not in favor of a $5 trillion tax cut. that's not my plan. i'm not putting in place any tax cut that will add to the deficit. that's point one. you can keep referring to a $5 trillion tax cut, but that's not my plan. >> okay. >> let's look at history. my plan is not like anything that's been tried before. my plan is to bring down rates, but also to bring down deductions and exemptions and credits at the same time, so the revenue stays in, but we bring down rates to get more people working. my priority is putting people back to work in america. they are suffering in this country. and we talk about evidence, look at the evidence of the last four years. it's absolutely extraordinary. we've got 23 million people out of work. or stopped looking for work in this country. >> all right. >> it's just -- when the president took office, 32 million people on food stamps, 47 million on food stamps today. economic growth this year,

slower than last year, and last year slower than the year before. going-forward with the status quo is not going to cut it for the american people who are struggling today. ♪ ♪ ♪ hi dad. many years from now, when the subaru is theirs... hey. you missed a spot. ...i'll look back on this day and laugh.

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let's talk -- we're still on the economy. this is theoretically now, a second segment, still on the economy. and specifically on what to do about the federal deficit. the federal debt. and the question -- you each have two minutes on this. and governor romney, you go first, because the president went first on segment one. and the question is this. what are the differences between the two of you as to how you would go about tackling the deficit problem in the country? >> good. i'm glad you raised that. and it's a critical issue. it's not just an economic issue, i think u.s. a moral issue. it's frankly not moral for my generation to keep spending massively more than we take in, knowing burdens will be passed on to the next generation and

they're going to be paying the interest and the principle all their lives. and the amount of debt we're adding at a trillion a year is simply not moral. how do we deal with it? mathematically, three ways you can cut a deficit. one is to raise taxes, two is to cut spending and number three is to grow the economy. because if more people work in a growing economy, they're paying taxes and you can get the job done that way. the president would prefer to raising taxes. i understand. the problem with raising taxes, it slows down the rate of growth, and you can never quite get the job done. i want to lower spending and encourage economic growth at the same time. what would i cut from spending? i will eliminate all programs by this test if they don't pass it. is the program so critical it's worth borrowing money from china to pay for it? if not, i'll get rid of it. obama care is on that list. i'm sorry, mr. president.

i use that term with all respect. >> i like it. >> i will stop the subsidy to pbs. i like pbs. i love big bird, like you too. but i'm not going to keep spending money to borrow money to pay for. that's number one. number two, i'll take programs that are currently good programs but i think could be run more efficiently at the state level and send them to the state. number three, i'll make government more efficient, combine some agencies and departments. my cutbacks will be done through attrition, by the way. this is the approach we have to take to get america to a balanced budget. the president said he would cut the deficit in half. unfortunately, he doubled it. trillion dollar deficits for the last four years. the president has put it in place as much public debt, almost as much debt held by the public as all prior presidents combined. >> mr. president, two minutes. >> when i walked into the oval office, i had more than a trillion dollar deficit greeting me. and we know where it came from. two wars that were paid for on a credit card.

two tax cuts that were not paid for. and a whole bunch of programs not paid for and then a massive economic crisis. and despite that, what we've said is, yes, we had to take some initial emergency measures to make sure we didn't slip into a great depression. but what we've also said is, let's make sure we're cutting out those things that are not helping us grow. so 77 government programs from aircrafts that the air force had ordered but weren't working very well. 18 government -- 18 government programs for education that were well intentioned, not helping kids learn. we went after medical fraud in medicare, medicaid, very aggressively, more aggressively than ever before, and have saved tens of billions. 50 billion of waste taken out of the system. i worked with democrats and republicans to cut a trillion dollars out of the discretionary domestic budget.

that's the largest cut in the discretionary domestic budget since dwight eisenhower. now, we all know that we have to do more. so i put forward a specific $4 trillion deficit reduction plan. it's on the website, you can look at all the numbers. what cuts we make, and what revenue we raise. and the way we do it is, $2.50 for every cut, we ask for $1 in additional revenue, paid for by asking those of us who have done very well in this country to contribute a little bit more to reduce the deficit. governor romney earlier mentioned the bowles-simpson commission. that's how the commission -- bipartisan commission that talked about how we should move forward suggested we have to do it. in a balanced way with some revenue and some spending cuts. and this is a major difference that governor romney and i have. let me just finish this point. because you're looking for contrasts. you know, when governor romney

stood on a stage with other republican candidates for the nomination, and he was asked, would you take $10 of spending cuts for just $1 of revenue? and he said no. now, if you take such an unbalanced approach, then that means you are going to be gutting our investments in schools and education. it means that governor romney talked about medicaid and how we could send it back to the states, but effectively, this means a 30% cut in the primary program we held for seniors in nursing homes, for kids with disabilities, and that's not a right strategy for us to move forward. >> mr. president, way over the [ male announcer ] alka-seltzer plus presents the cold truth.

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>> the president should have grabbed that. >> do you support it? >> i have my own plan. i think the president should have grabbed it. if you have some adjustments, make it, take it to congress, go for it, fight for it. >> that's what we've done. $4 trillion plan. >> you've been president for four years. you said you would cut the deficit in half. and we'll have a trillion dollar deficit each of the next four years. if you are re-elected we'll get to a trillion dollar deficit. you said before you would cut it in half. i love this idea of $4 trillion in cuts. you've found $4 trillion to get closer to a balanced budget, yet we still have trillion dollar deficits every year. let me come back -- why don't i want to raise taxes? why don't i want to raise taxes on people? and actually you said it. back in 2010, you said, look, i'm going to extend the tax policies we have. i won't raise taxes on anyone. when we're in a recession, you shouldn't raise taxed on anyone. the economy is still growing

slow. as a matter of fact, it's growing much more slowly now than when you made the statement. if you believe the same thing, you don't want to raise taxes on people. and the reality is, it's not just wealthy people, not just donald trump are you taxing. it's all the businesses that employ one quarter of the workers in america, that are taxes as individuals. you raise taxes and you kill jobs. that's why the national federation of independent businesses say your plan will kill 700,000 jobs. i don't want to kill jobs in this environment. i want to make one more point. >> let him answer the tax thing for a moment. >> okay. >> mr. president. >> well, we've had this discussion before. >> well, in order -- about the idea to reduce the deficit, there has to be revenue in addition to cuts. >> there has to be revenue in addition to cuts. >> mr. romney has rule out revenue. >> look, the revenue i get is

by more people working, getting higher pay, paying more taxes. that's how we get growth and balance the budget. the idea of taxing people more, putting more people out of work, you will never get there, you never balance the budget by raising taxes. spain spends 42% of their total economy on government. we're now spending 42% of our economy on government. i don't want to go down the path of spain. i want to put more americans to work. >> mr. president, in order to get the job done, it is going to be balanced? >> if we're serious, we have to take a balanced, responsible approach. by the way, this is not just when it comes to individual taxes, let's talk about corporate taxes. now, i have identified areas where we can right away make a change that i believe would actually help the economy. the oil industry gets $4 billion a year in corporate welfare.

basically, they get deductions that those small businesses that governor romney refers to, they don't get. now, does anybody think that exxonmobil needs some extra money, when they are making money every time you go to the pump? why wouldn't we want to eliminate that? why wouldn't we eliminate tax breaks for corporate jets. my attitude is, if you have a corporate jet, you can probably afford to pay full freight, not get a special break for it. when it comes to corporate taxes, governor romney said he wants to in a revenue neutral way close loopholes, deductions, he hasn't identified which ones they are, but thereby bring down the corporate rate. well, i want to do the same thing, but i've identified how we can do that, and part of the way to do it, is to not give tax breaks to companies that are shipping jobs overseas. right now, you can actually take a deduction for moving a plant overseas. i think most americans would

say, that doesn't make sense. and all that raises revenue. if we take a balanced approach, what that then allows us to do is also help young people the way we already have during my administration, make sure they can afford to go to college. it means the teacher i met in las vegas, a wonderful young lady who described to me, she has 42 kids in her class. the first two weeks, she has some of them sitting on the floor, until finally they get reassigned. they are using textbooks that are ten years old. that is not a recipe for growth, that's not how america was built. and so budgets reflect choices. ultimately, we're going to have to make some decisions. and if we're asking for no revenue, then that means that we've got to get rid of a whole bunch of stuff, and the magnitude of the tax cuts that you're talking about, governor, would end up resulting in severe hardship for people, but more importantly, would not help us grow.

as i indicated before, when you talk about shifting medicaid to states, we're talking about potentially a 30 -- a 30% cut in medicaid over time. now, that may not seem like a big deal when it is just -- numbers on a sheet of paper, and if we're talking about a family who has an autistic kid depending on that medicaid, that's a big problem. and governors are creative, no doubt about it. they're not creative enough to make up 30% of revenue on something like medicaid. what ends up happening is, some people end up not getting help. >> jim, we've gone on a lot of topic there, so it will take a minute to go to medicaid to schools to oil companies to tax breaks to companies going overseas. let's go through them one by one. first of all, the department of energy has said the tax break for oil companies is $2.8 billion a year. and it's actually an accounting treatment that's been in place for 100 years. >> it's time to end it.

>> and in one year, you provided $90 billion in breaks to the green energy world. now, i like green energy as well. but that's about 50 years' worth of what oil and gas receives, and you say exxonmobil, this $2.8 billion goes largely to smaller companies, to drilling operators and so forth. if we get the tax rate from 35% to 25%, that $2.8 billion is on the table. of course it's on the table. that's probably not going to survive, you get that rate down to 25%. but don't forget, you put $90 billion, like 50 years' worth of breaks into solar and wind, to solyndra and fiskar and tessla and enter one. i have a friend who says, you don't pick the winners and losers, you pick the losers. and the idea that you get a break for shipping jobs overseas

i have been in business for 20 years, i have no idea what you're talking about. it is simply not the case. what we have right now, i would like to bring money from overseas back to this country. and medicaid to states, i'm not sure where this came in. except this. i would like to take medicaid dollars to go to states and say you will get what you got last year, plus inflation, plus 1%, and then you will manage your care for your poor in the way you think best. and i remember as a governor when this idea was floated by tommy thompson, the governors, republican and democrats, said please let us do that. we can care for our own poor in so much better and more effective a way, than having the federal government tell us how to care for our poor. so let's state -- one of the magnificent things about this country is the whole idea that states are the laboratories of democracy. don't let the federal government tell them what kind of training

programs they have to have. and what kind of medicaid they have to have. let states do this. if a state gets in trouble, we can step in, see if we can fin a way to help them. >> let's go. >> the right approach is one which relies on the brilliance of the states, not the federal government. >> still going on to the economy, another part of it. questions? anyone have occasional constipation, diarrhea, gas, bloating? yeah. one phillips' colon health probiotic cap each day helps defend against these digestive issues with three strains of good bacteria. approved! [ female announcer ] live the regular life. phillips'.

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all right. this is segment three. the economy. entitlements. first answer goes to you, two minutes, mr. president. do you see a major difference

between the two of you on social security? >> i suspect that on social security, we've got say somewhat similar position. social security is structurally sound. it will have to be tweaked the way it was by ronald reagan and democratic speaker tip o'neill. but it is -- the basic structure is sound. but i want to talk about the values behind social security and medicare, and then talk about medicare. because that's the big driver of our deficits right now. my grandmother, some of you know, helped to raise me, and my grandparent did. my grandfather died a while back. my grandmother died three days before i was elected president. she was fiercely independent. she worked her way up, only had a high school education, starts as a secretary. ended up being the vice president of a local bank. and she ended up living alone by choice. and the reason she could be

independent was because of social security and medicare. she had worked all her life, put in this money, and understood that there was a basic guarantee under which she could not go. that's the perspective i bring when i talk about what's called entitlements. the name itself implies some sort of dependency on the part of folks. these are folks that have worked hard, like my grandmother and there are millions of people out there who are counting on this. my approach is to say how do we strengthen the system over the long term? in medicare, what we did, we said we are going to have to bring down the costs if we are going to deal with long-term deficits. to do that, let's look where the money is going. $716 billion we were able to save from the medicare program by no longer overpaying insurance companies, by making sure that we weren't overpaying providers, and using that money, we were actually able to lower prescription drug costs for

seniors by an average of $600 and we were also able to make a significant dent in providing them the kind of preventative care that will ultimately save money throughout the system. so the way for us to deal with medicare in particular is lower health care costs. when it comes to social security, as i said, you don't need a major structural change in order to make sure that social security is there for the future. >> a follow-up on this, first, governor romney you have two minutes on social security and entitlements. >> well, jim, our seniors depend on these programs and i know any time we talk about entitlements, people become concerned that something will happen to change their life for the worst. and the answer is neither the president nor i are proposing any changes for any current retirees or near retirees either to social security or medicare. so if you are 60 or around 60 or older, you don't need to listen any further. but for younger people, we need to talk about what changes will be occurring.

oh, i just thought about one. and that is in fact i was wrong, when i said the president isn't proposing any changes for current retirees. on medicare he is. on social security he is not. but on medicare, current retirees, he's cutting $716 billion from the program. by not paying hospitals and providers. just saying we'll reduce the rates are you going to get paid across the board. everybody will get a lower rate. that's not just going after places with abuse, that's saying we're cutting the rates. some 15% of the hospitals and nursing homes won't take more medicare patients under that scenario. we also have 50% of doctors who say they won't take more medicare patients. we have 4 million people on medicare advantage that will lose medicare advantage because of the $716 billion in cuts. i can't understand how you can cut medicare 716 $billion for current resip yefrnts of medicare.

you point out, we're putting some back, better prescription program. that's $1 for every $15 you've cut. they are smart enough to know that's not a good trade. i want to take that $716 million you've cut, put it back into medicare. by the way, we can include a prescription program, if we need to improve it. but the idea of cutting $716 billion from medicare to be able to balance the additional cost of obama care is in my opinion a mistake. with regard to young people coming along, i have proposals to make sure medicare and social security are there for them without any question. >> mr. president. >> first of all, i think it's important for governor romney to present this plan that he says will only affect folks in the future. and the essence of the plan as you would turn medicare into a voucher program. it's called premium support, and it's a voucher program. his running mate. >> and you don't support that? >> i don't. and let me explain why.

>> and again that's for future not current retirees. >> if you are 54 or 55, you might want to listen this will affect you. the idea, originally presented congressman ryan, your running mate. we would give a voucher to seniors and they could go out in the private marketplace and buy their own health insurance. the problem is, that because the voucher wouldn't necessarily keep up with health care inflation, it was estimated that this would cost the average senior about $6,000 a year. now, in fairness, what governor romney has now said is, he will maintain traditional medicare alongside it. but there's still a problem. because what happens is, those insurance companies are pretty clever at figuring out who are the younger and healthier seniors, they recruit them, leaving the older, sicker seniors in medicare. and every health care economist who looks at it says what will

happen is, the traditional medicare system will collapse. and then what you've got is folks like my grandmother, at the mercy of the private insurance system, precisely at the time when they are most in need of decent health care. so i don't think vouchers are the right way to go, and this is not my -- not only my opinion. aarp thinks that the savings we obtained from medicare bolstered the system, lengthened the medicare trust fund by eight years. benefits were not affected at all. and ironically if you repeal obama care, and i've become fond of this terms, obama care. if you repeal it, what happens, those seniors right away will be paying $600 more in prescription care. they'll now have to pay co pays for basic checkups that could keep them healthier. and the primary beneficiary of that repeal are insurance companies that are estimated to

gain billions of dollars back when they aren't making seniors any healthier, and i don't think that's the right approach when it comes to making sure that medicare is stronger over the long term. >> we'll talk about -- specifically about health care in a moment. do you support the voucher system, governor? >> what i support is no change for current retirees and near retirees to medicare and the president supports taking $716 billion out of that program. >> what about the voucher. >> that's number one. >> all right. >> number two is for people coming along that are young, what i'd do to make sure that we can keep medicare in place for them, is to allow them to either choose the current medicare program or a private plan, their choice. and they'll have at least two plans that will be entirely at no cost to them. they don't have to pay additional money no, additional $6,000. that's not going to happen. they will have two plans. no money. and if the government can offer premium as low as private

sector, they will be happy to get traditional medicare. or they'll be able to get a private plan. i know my own view, i would rather have a private plan. i would just as soon not have the government tell me what company i have. if i don't like them, i get rid of them and find another insurance company. people make their own choice. the other thing to save medicare? the benefits high for those low income, but for higher income people, we have to lower some of the benefits. make sure the program is there for the long term. that's the plan i come forth for the long term. it came not only for paul ryan, but also came from bill clinton's chief of staff. this is an idea that's been around a long time. saying, hey, let's see if we can't get competition into the medicare world so people can get the choice of different plans at lower cost, better qualities. i believe in competition. >> jim, if i can respond very quickly. first of all, every study has shown medicare has lower

administrative costs than private insurance does, which is why seniors are generally pretty happy with it, and private insurance has to make a profit. nothing wrong, that's what they do. and so you have higher administrative costs, plus profit, on top of that. and if you are going to save any money through what governor romney is proposing, what has to happen, the money has to come from somewhere. and when you move to a voucher system, you are putting seniors at the mercy of those insurance companies, and over time if traditional medicare has decayed or fallen apart, they are stuck. and this is the reason why aarp has said that your plan would weaken substantially and that's why they were supportive of the approach that we took. one last point i want to make. we do have to lower the cost of health care, not just in medicare and medicaid.

but overall. >> we'll talk about that in a minute. >> that's a big topic. can we stay on medicare? can we finish? >> yeah, i want to get to it, but all i want to do -- very quickly, before we leave the economy. >> let's get back to medicare. >> no, no. >> the president said the government can provide the service at lower cost and without a profit. >> all right. >> if that's the case, ten it will always be the best product people can purchase. >> wait a minute, governor. >> my experience, the private sector is typically able to provide a better product at a lower cost. >> can the two of you agree have a choice, a clear choice on the two of you on medicare? >> absolutely. >> absolutely. >> to finish quickly, briefly, on the economy. what is your view about the level of federal regulation on the economy right now? is there too much? and in your case, mr. president, should there be more? beginning with you, this is not a new two-minute segment. we're going to go for a few minutes, and then we'll go to

health care. >> regulation is essential. you can't have a free market work if you don't have regulation. as a business person, i needed to know the regulations, i needed them there. you couldn't have people opening up banks in their garage and making loans. i mean, you have to have regulations so that you can have an economy work. every free economy has good regulations. at the same time, it could be become excessive. >> is it excessive now, do you think? >> in some places. >> where? >> it can become out of day. and what's happened with 134 of the legislation passed during the president's term, you've seen regulation become excessive and it's hurt the economy. let me give you an example. dodd/frank was passed and it includes within it a number of provisions that i think has some unintended consequences that are harmful to the economy. one is it, it designates a number of banks as too big to fail. they're effectively guaranteed by the federal government. this is the biggest kiss that's been given to new york banks i've ever seen.

it's an enormous boone for them. 122 community and small banks have closed since dodd-frank. there is one example. >> you want to repeal dodd-frank? >> repeal and replace it. we're not getting rid of all regulation. there are some parts of dodd-frank that make all the sense in the world. you need transparency, you need to have leverage limits for -- >> here is the specific -- >> excuse me. >> let me mention the other one. let's talk about the big one. >> no, let's not. let's let him respond, let's let him respond to dodd frank and what the governor said. >> i think this is a great example. the reason we have been in such an enormous economic crisis was prompted by reckless behavior across the board. now, it wasn't just on wall street. you had loan officers were giving loans and mortgages that really shouldn't have been given, because the folks didn't qualify. you had people borrowing money

to buy a house they couldn't afford. you had credit agencies that were stamping these as a-1 great investments when they weren't. but you also had banks making money, hanover fist, churning out products that the bankers themselves didn't even understand, in order to make big profits but knowing that it made the entire system vulnerable. what did we do? we stepped in, had the toughest reforms on wall street since the 1930s. we said, banks, you have to raise your capital requirements. you can't engage in some of this risky behavior that is putting main street at risk. we're going to make sure you have a living will, so we can know how you're going to wind things down if you make a bad bet so we don't have other taxpayer bailouts. in the meantime, by the way, we also made sure that all the help we provided those banks was paid back every single dime with interest.

now, governor romney said he wants to repeal dodd-frank. and i appreciate and it appears we have some agreement that a marketplace to work has to have some regulation. but in the past, governor romney says he wants to repeal dodd-frank, roll it back. so the question is, does anybody out there think that the big problem we had is that there was too much oversight and regulation of wall street? because if you do, then governor romney is your candidate. but that's not -- >> sorry, jim. >> -- what i believe. >> that's just not the facts. we have to have regulation on wall street. that's why i'd have regulation, but i wouldn't designate five banks too big and fail and give them a blank check. that's one of the inuntended consequences of dodd-frank, it wasn't thought through properly. we need to get rid of it, it's hurting regionally small banks, they're getting hurt.

another regulation, we were giving mortgages to people who weren't qualified. exactly right. one of the reasons for the great financial calamity we had. and dodd-frank says we need qualified mortgages and if you give a mortgage that's not qualified, there are big penalties, except they never went on and defined what a qualified mortgage was. it's been two years. with we don't know what a qualified mortgage is yet, so banks are reluctant to make loans, mortgages. try to get a mortgage these days. it's hurt the housing market, because dodd-frank didn't anticipate putting in place the kinds of regulations you have to have. it's not that dodd-frank was always wrong with too much regulation, sometimes they didn't come out with the clear regulation. i'll make sure we don't hurt the functioning of our marketplace. i want to get back good jobs. [ male announcer ] whether it's kevin's smartphone...

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i think we have another clear difference between the two of you. now, let's move to health care, where i know there is a clear difference. and that has to do with the affordable care act, obama care. and it's a two minute new segment. that means two minutes each, you go first governor romney. you want it repealed. you want the affordable care act

repe repealed, why? >> i sure do. it comes in part from my experience. i was in new hampshire, a woman came to me and said, look, i can't afford insurance for myself or my son. i met a couple in appleton, wisconsin, and they said we're thinking of dropping insurance, we can't afford it. and the number of small businesses i've gone to who are saying they're dropping insurance because they can't afford it, the cost of health care is prohibitive. and we have to deal with costs. unfortunately, when -- when you look at obama care, the congressional budget office says it will cost 2,500 per year more than traditional insurance. so it's adding to the costs. as a matter of fact, when the president ran for office, he said by this year, he would have brought down the cost of insurance for each family by $2,500 per family. instead, it's gone up by that amount. so it's expensive. expensive things hurt families, that's one reason i don't want it. second reason, it cut $716 billion from mid care to pay for it. i want to put that money back in

medicare for our seniors. number three, it puts in place an un-elected board that will tell people ultimately what kind of treatments they can have. i don't like that idea. fourth, there was a survey done of small businesses across the country, said what's the effect of obama care on hiring plans. and three quarters of them said, it makes us less likely to hire people. i just don't know how the president could have come into office facing 23 million people out of work, rising unemployment, an economic crisis at the kitchen table, and spent his energy and passion for two years fighting for obama care, instead of fighting for jobs for the american people. it has killed jobs, and the best course for health care is do what we did in my state. craft a plan at the state level that fits the needs of the state and then let's focus on getting the costs down for people, rather than raising it with a $2,500 additional premium. >> mr. president, the argument against repeal?

>> well, four years ago, when i was running for office, i was traveling around and having those same conversations governor romney is talking about. and it wasn't just that small businesses were seeing costs skyrocket, and they couldn't get affordable coverage even if they wanted to provide it to their employees. it wasn't because this was the biggest driver of the federal deficit, but it was families, who were worried about going bankrupt if they got sick. millions of families, all across the country. if they had a pre-existing condition, they might not be able to get coverage at all. if they did have coverage, insurance companies might impose an arbitrary limit. so as a consequence, paying premiums, somebody gets really sick, lo and behold, they don't have the money to pay the bills because the insurance companies say that they've hit the limit. so we did work on this, alongside working on jobs, because this is part of making sure that middle class families are secure in this country.

and let me tell you exactly what obama care did. number one, if you got health insurance, it doesn't mean a government takeover. you keep your own insurance. you keep your own doctor. but it says insurance companies can't jerk you around and can't impose arbitrary lifetime limits. they have to let you keep your kid on your insurance plan until you're 26 years old. and it says you will get rebates if insurance companies are spending more on administrative costs and profits than actual care. number two, if you don't have health insurance, we're essentially setting up a group plan that allows you to benefit from group rates typically 18% lower than if you are out there trying to get insurance on the individual market. now, the last point i would make, before -- >> two minutes is up, sir. >> no, i think -- i had five seconds before you interrupted

me. the irony, we've seen this model work really well in massachusetts. because governor romney did a good thing working with democrats in the state, to set up what is essentially the identical model and as a consequence, people are covered there. it hasn't destroyed jobs, and as a consequence, we now have a system in which we have the opportunity to start bringing down costs as opposed to leaving millions of people out in the cold. >> your five seconds went away a long time ago. all right, governor, tell the president directly why you think what he just said is wrong about obama care. >> well, i did with my first statement, but i'll go on. >> please elaborate. >> first of all, i like the way we did it in massachusetts.

i like the fact that in my state we had republicans and democrats come together and work together. what you did instead was to push through a plan without a single republican vote. as a matter of fact, when massachusetts did something quite extraordinary, elected a republican senator to stop obama care, you pushed it through anyway. entirely on a partisan basis, instead of bringing america together and having a discussion, on this important topic, you pushed something through that you and harry reid and nancy pelosi thought was the best answer and pushed it through. what we did, we worked together. 200 legislators, only 2 voted against the plan. we didn't raise taxes, we didn't cut medicare by $716 billion. we didn't put in place a board that can tell people ultimately what treatments they're going to receive. we didn't also do something that i think a number of people across this country recognize,

which is put people in a position where they're going to lose the insurance they had and they wanted. right now, the cbo says up to 20 million people will lose their insurance as obama care goes into effect next year. and likewise, a study by mckenzie and company said 30% are anticipating dropping them from coverage. for those reasons, for the tax, medicare, for this board, for people losing their insurance, this is why people don't want obama care, it's why republicans said do not do this 37. the republicans had a plan, they put it out, it was a bipartisan plan, it was swept aside. i think somebody this big has to be done on a bipartisan basis. and we have to have a president who can reach across the aisle and fashion legislation with the input from both parties. >> governor romney said this has to be done with a bipartisan basis. this was a bipartisan idea, in fact, it was a republican idea.

governor romney at the beginning said what we did in massachusetts could be a model for the nation, and i agree that the democratic legislators in massachusetts might have given some advice to congress on how to cooperate. but the fact is, we use the same advisers, and it's the same plan. it -- when governor romney talks about this board, for example, un-elected board we've created. what this is, is a group of health care experts, doctors, et cetera, to figure out how can we reduce the cost of care in the system overall? because there are two ways of dealing with our health care crisis. one is to simply leave a whole bunch of people uninsured and let them fend for themselves. to let businesses figure out how long they can continue to pay premiums until they finally give up and the workers are no longer getting insured. and that's been the trend line.

or alternatively, we can figure out, how do we make the cost of care more effective? and there are ways of doing it. at cleveland clinic, one of the best health care systems in the world, they actually provide great care, cheaper than average. and the reason they do, is because they do some smart things, they say if a patient is coming in, let's get all of the doctors together at once, do one test instead of having the patient runaround with ten tests. let's make sure we're providing preventative care so we're catching something like the onset of diabetes. let's pay providers on the basis of performance as opposed to on the basis of how many procedures they've engaged in. know, so what this board does is identifies best practices and says, let's use the purchasing power of medicare and medicaid to help to institutionalize all these good things that we do.

and the fact of the matter is, that when obama care is fully implemented we'll be in a position to show that costs are going down. and over the last two years, health care premiums have gone up. it's true, but they've gone up slower than any time in the last 50 years. so we're already beginning to see progress. in the meantime, folks out there with insurance, you're already getting a rebate. let me make one last point. governor romney says we should replace it. i'm going to repeal it. we should replace it with something. the problem is, he hasn't described what exactly we're going to replace it with, other than saying, we're going to leave it to the states. the fact of the matter is, some of the prescriptions that he's offered, like letting you buy insurance across state lines, there's no indication that that somehow is going to help someone who has a pre-existing condition be able to finally buy insurance. in fact, it's estimated that by repealing obama care, you're

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let's let the governor explain what you would do if obama care is repealed? how would you replace it? >> well, actually it's -- it's a lengthy description, but number one, preexisting conditions are covered under my plan. number two, young people able to stay on the family plan. that's already offered in the private marketplace. you don't have to have the government mandate that for that to occur. let's come back on something the president and i agree on. the key task we have in health care is to get costs down, so it's more affordable for families. and he has as a model for doing that a board of people, at the government, an unelected appointed board that will decide what treatments people will get. in my opinion, the government is not effective in bringing down the cost of almost anything.

as a matter of fact, free people and free enterprises, trying to find ways to do things better are able to be more effective than bringing down the costs than the government ever will be. your example of the cleveland clinic is my case in point, along with several others i could describe. this is the private market, enterprises competing with each other, learning how to do better and better jobs. i used to consult to hospitals and health care providers and i was astonished at the creativity and innovation that exists with american people. in order to bring the cost of health care down, we don't need a board of 15 people telling us what kind of treatments we should have. we instead need to put insurance plans, providers, hospitals, doctors, on target, such that they have an incentive as you say, performance pay, for doing an excellent job. keeping costs down. inner mountain health care does it superbly well. cleveland clinic, others, but the right answer is not to have the federal government take over

health care and start mandating to the providers across america, telling a patient and a doctor, what kind of treatment they can have. that's the wrong way to go. the private market and individual responsibility always work best. >> let me just point out, first of all, this board we're talking about, can't make decisions about what treatments are given. that's explicitly prohibited in the law. let's go back to what governor romney indicated, under his plan he would be able to cover people with preexisting conditions. well, actually, governor, that isn't what your plan does. what your plan does is to duplicate what's already the law, which says if you are out of health insurance for three months, then you can end up getting continuous coverage, and an insurance company can't deny

you if it's been under 90 days. but that's already the law. and that doesn't help the millions of people out there with preexisting conditions. there is a reason why governor romney set up the plan that he did in massachusetts. it wasn't a government takeover of health care, it was the largest expansion of private insurance, but what it does say is that insurers, you have to take everybody. that also means you have more customers. but when governor romney says he'll replace it with something, but can't detail how it will be, in fact, replaced, and the reason he set up the system he did in massachusetts because there isn't a better way of dealing with the preexisting conditions problem, it reminds me, he says he will close deductions and loopholes for his tax plan. that's how it will be paid for, we don't know the details. he says that he's going to replace dodd-frank, wall street reform, but we don't know

exactly which ones, he won't tell us. he now says he'll replace obama care and ensure all the good things in it will be in there and you don't have to worry, and at some point i think the american people have to ask themselves, is the reason that governor romney is keeping all these plans to replace secret because they are too good? is it because that somehow middle class families will benefit too much from them? no, the reason is, is because when we reform wall street, when we tackle the problem of pre-existing conditions, then, you know, these are tough problems, and we have to make choices. and the choices we've made have been ones that are ultimately benefiting middle class families all across the country. >> we are going to move -- >> i have to respond to that, in my experience as a governor, if i come in and lay down a piece

of legislation and say, it's my way or the highway, i don't get a lot done. what i do, the way tip o'neill and ronald reagan did, they worked together. ronald reagan laid out the principles he was going to foster, lower tax rates, broaden the base, you said the same thing. simplify the tax code, broaden the base. those are my principles, i want to bring down the tax burden on middle income families. i want to work with congress on bringing down deductions. one way, for instance would be to have a single number, make up a number, $25,000, $50,000, anybody can have deductions up to that amount. and then that number disappears for high income people. that's one way to do it. another way to do it would be to follow bowles-simpson and do it deduction by deduction. we need to bring down rates, broaden the base, simplify the code and create incentives for growth. with regard to health care, you

had remarkable details with regard to my preexisting condition plan. you studied up on my plan. i do have a plan that deals with people with pre-existing conditions, that's part of my health care plan. what we did in massachusetts is a model for the nation state by state. and i said that at that time. the federal government, taking over health care for the entire nation, and whisking aside the tenth amendment which gives states the rights for these kinds of things is not the course for america to have a stronger, more vibrant economy. turn to senokot-s tablets. senokot-s has a natural vegetable laxative ingredient plus the comfort of a stool softener for gentle, overnight relief of occasional constipation. go to senokot-s.com for savings. [ male announcer ] why do more emergency workers everywhere trust duracell...?? duralock power preserve.

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and that is a terrific segue to our next segment. and is the role of government. and let's see, role of government, and it is -- you are first on this, mr. president. the question, do you believe -- both of you, but you have the first two minutes, mr. president, do you believe there is a fundamental difference on the two of you on how you view the mission of the federal government?

>> well, i definitely think there are differences. >> yeah. >> the first role of the federal government is to keep the american people safe. that's its most basic function and as commander in chief, that is something that i have worked on and thought about every single day i've been in the oval office. but i also believe that government has the capacity, the federal government, has the capacity to help open up opportunity and create ladders of opportunity and to create framework where the american people can succeed. the genius of america is the free enterprise system and freedom, the fact that people can go out, start a business, work on an idea, make their own decisions, but as abraham lincoln understand, there are also some things we do better together. in the middle of the civil war, abraham lincoln said let's help

to finance the trans continental railroad. let's start the national academy of sciences, let's start land grant colleges. because we want to give these gateways of opportunity for all americans, because if all americans are getting opportunity, we're all going to be better off. that doesn't restrict people's freedom, it enhances it. and so what i've tried to do as president is to apply those same principles. and when it comes to education, what i've said, we have to reform schools that are not working. we used something called race to the top. it wasn't a topdown approach, governor, what we said to states, we'll give you more money if you initiate reforms. and as a consequence you had 46 states around the country who have made a real difference. but what i've also said, let's hire another 100,000 math and science teachers to maintain our technological lead and people skilled and able to succeed. and hard pressed states right

now can't all do that. in fact, we've seen layoffs of hundreds of thousands of teachers over the last several years. and governor romney doesn't think we need more teachers, i do. i think that is the kin of investment where the federal government can help. it can't do it all. but it can make a difference, and as a consequence, we'll have a better trained workforce and that will create jobs, because companies want to locate in places where we have a skilled workforce. >> two minutes, governor. on the role of government, your view. >> well, first i love great schools. massachusetts, our schools are ranked number one in all 50 states. the key to great schools is great teachers. i reject the idea that i don't believe in good teachers or great teachers. every school district, every state, should make that decision on their own. the role of government, look behind us. the constitution and declaration of independence. the role of government is to promote and protect the principles of those documents. first, life and liberty.

we have a responsibility to protect the lives and liberties of our people. that means the military second to none. i don't believe in cutting our military. i believe in maintaining the strength of america's military. second, in that line that says we are endowed by our creator with our rights, i believe we must maintain our commitment to religious tolerance and freedom in this country. that statement also says we are endowed by our creator with the right to pursue happiness as we chose. i interpret that to say those who are less fortunate are cared for by one another. we are a nation that believes we're all children of the same god, and we care for those who have difficulties. those that are elder letter and those that have challenges. disabled, we care for them. we look for discovery, innovation, all of these things desired out of the american heart to provide the pursuit of happiness for citizens, but we also believe in maintaining for individuals the right to pursue their dreams and not to have the

government substitute itself for the rights of free individuals. and what we're seeing right now is in my view a trickle down government approach, which has government thinking it can do a better job than free people pursuing their dreams. and it's not working. and the proof of that is one of the six people in poverty, we have gone from 32 million on food stamps to 47 million on food stamps, 57% of college graduates this year can't find work. we know that the path we're taking is not working, it's time for a new path. >> all right. let's go through some specifics in terms of how each of you view the role of government. education. does the federal government have a responsibility to improve the quality of public education in america? >> the primary responsibility for education, is, of course, at the state and local level. but the federal government can play an important role.

i agree with secretary arne duncan with ideas he put forward on race to the top. some of them, but not all of them. the federal government can get local and state schools to do a better job. my own view, i've added to that i happen to believe -- i want the kids getting federal dollars from i.d.e.a. or title 1, poor kids or disabled kids or lower income kids, rather, i want them to be able to go to the school of their choice. so all federal funds, instead of going to the state or the school district, i would have go -- follow the child and let the parent and the child decide where to send their student.

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bone fractures and low magnesium levels with long-term use of nexium. possible side effects include headache, diarrhea, and abdominal pain. other serious stomach conditions may still exist. let your doctor do her job. and you do yours. ask if nexium is right for you. if you can't afford your medication, astrazeneca may be able to help. how do you see the federal government's responsibility to improve the quality of public education in this country? >> as i indicated, it has a significant role to play. to our race to the top program, we've worked with democratic and republican governors to initiate major reforms, having an impact right now. >> do you think you have a difference of your views and governor romney about education? >> this is where budgets matr, because budgets reflect choices so when governor romney indicates that he wants to cut taxes, and potentially benefit

folks like me and him and to pay for it, we have to initiate significant cuts in federal support for education, that makes a difference. his running mate, congressman ryan, put forward a budget that reflects many of the principles that governor romney has talked about. it wasn't very detailed, this seems to be a trend. what it did do, if you extrapolated how much money we're talking about, you would look at cutting the education budget by up to 20%. when it comes to community colleges, we are seeing great work done out there all over the country, because we have the opportunity to train people for jobs that exist right now. one of the things i suspect governor romney and i agree on, getting businesses to work with

community colleges to set up training programs -- training programs. >> do you agree, governor? >> let me finish the point. >> going very well in my state, by the way. >> where they are partnering, designing training programs and people who are going through them, know there is a job waiting for them if they complete. that makes a big difference, but that requires federal support. let me just say one final example, when it comes to making college affordable, whether it's two year or four year, one of the things i did as president, we were sending $60 million to banks or lenders to administer loans. we decided to take out the middleman. and as a consequence we've been able to provide millions more students assistance, keep lower interest rates on student loans, and this is an example of where our priorities make a difference. governor romney, i genuinely believe cares about education,

but when he tells a student that, you know, you should borrow money from your parents to go to college, you know, that indicates the degree to which, you know, there may not be as much of a focus on the fact that folks like myself, folks like michelle, kids probably who attend the university of denver, just don't have that option and for us to be able to make sure they have that opportunity, they can walk through that door, it's vitally important, not just to those kids, it's how we're going to grow this economy over the long term. >> we're running out of time. >> mr. president, you are entitled to your own airplane, your own house as president, but not to your own facts. i'm not going to cut education funding. i don't have any plan to cut education funding, and grant for people that go to college, i won't make cuts there the place where you put your money is a clear indication of where your heart is.

you put $90 billion into green jobs. i'm in favor of green energy, $90 billion, that would have hired 2 million teachers. $90 billion. and these businesses, many of them have gone out of business. i think about half of them, of the ones that have been invested in -- have gone out of business. a number of them were owned by people who were contributors to your campaign. the right course for america's government, we're talking about the role of government, is not to become the economic player picking winners and losers, telling people what kind of health treatment they can receive. taking over the health care system that's existed in this country for a long, long time and produced the best health care records in the world. how do we make the private sector more efficient and effective. how do we get schools to be more competitive. i say we grade them. so parents know which schools are succeeding and failing, so

they can take their child to a school that's more successful. i don't want to cut our commitment to education. i want to make it more effective and efficient. and by the way, i've had that experience. i don't just talk about it. i've been there. massachusetts schools are ranked number one in the nation. this is not because i didn't have commitment to education, it's because i care about education for all of our kids. >> all right, gentlemen, look -- excuse me, one second. excuse me, sir. we've barely got three minutes left. i'm not going to grade the two of you and say your answers have been too long or i've done a poor job. >> you've done a great job, jim. >> well, the fact is, the role of government and governing, we've lost a pod, in other words, we only have three minutes left in the debate before we go to your closing statements. and so i want to ask finally here, and remember, we have three minutes total time here -- and the question is this -- many

of the legislative functions of the federal government right now are in a state of paralysis as a result of partisan gridlock. if elected, re-elected what would you do about that? >> i had the great experience, it didn't seem like it at the same, of being elected in a state where my legislature was 87% democrat. that meant i figured out from day one i had to get along and i had to work across the aisle to get anything done. we drove our schools to be number one, we cut taxes 19 times. >> what would you do as president? >> i would sit down day one. >> on president, i will sit down on day one -- actually, the day after i get elected, i'll sit down with leaders, republican and democrat leaders, as we did in my state, we met every monday for a couple hours, talked about the challenges and issues in our state in that case. we have to work on a collaborative basis, not to compromise our principles, but because there is common ground, and the challenges america faces right now -- look, the

reason i'm in this race, there are people that are really hurting today in this country. and we face -- this deficit could crush the future generations. what's happening in the middle east, developments around the world that are of real concern and republicans and democrats both love america, but we need to have leadership. leadership in washington, that will actually bring people together and get the job done and could not care less if it's a republican or a democrat. i've done it before i'll do it again. >> mr. president. good first of all, i think governor romney's going to have a busy first day, because he's also going to repeal obama care, which won't be popular with democrats as you sit down with them. look, my philosophy has been i will take ideas from anyone as long as they make middle class families stronger. that's how we cut taxes for middle class families and small businesses. that's how we cut a trillion

dollars in spending that wasn't advancing that cost. that's how we signed three trade deals into law, helping to double exports and sell more american products around the world. that's how we repealed don't ask, don't tell. that's how we ended the war in iraq as i promised, and that's how we're going to wind down the war in afghanistan. that's how we went after al qaeda and bin ladin. we've seen progress even under republican control under the house of representatives. but ultimately, part of being principled, part of being a leader, is, a, describe exactly what it is you intend to do, not just saying i'll sit down, you have to have a plan. number two, what's important is occasionally you have to say no. to folks both in your own party and in the other party. and, you know, have we had fights between me and the republicans when they fought back against us, reining in the excesses of wall street? absolutely. because that was a fight that needed to be had.

when we were fighting about whether or not we were going to make sure that americans had more security with their health insurance, and they said no, yes, that was a fight that we needed to have. and so part of leadership and governing is both saying what it is that you are for, but also being willing to say no to some things. and i have to tell you, governor romney, when it comes to his own party during the course of this campaign, has not displayed that willingness to say no to the more extreme parts of his party. when i was ready, not my joints. [ female announcer ] could your "i want" become "i can"? talk to your doctor. orencia reduces many ra symptoms like pain, morning stiffness and progression of joint damage. it's helped new ra patients and those not helped enough by other treatments. do not take orencia with another biologic medicine for ra due to an increased risk of serious infection. serious side effects can occur including fatal infections. cases of lymphoma and lung cancer have been reported.

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just the closing statements. there was a coin toss. governor romney, you won the toss, and you elected to go last. so you have a closing two minutes, mr. president. >> well, jim, i want to thank you, and i want to thank governor romney. i think this was a terrific debate, and i appreciate it. i want to thank the university of denver. you know, four years ago we were going through a major crisis.

and yet my faith and confidence in the american future is undiminished, and the reason is because of its people. because of the woman i met in north carolina who decided at 55 to go back to school because she wanted to inspire her daughter and has a job from that new training she has gotten. because of a company in minnesota who was willing to give up salaries and perks for their executives to make sure they didn't lay off workers during a recession. the auto workers you meet in toledo or detroit, that take pride in building the best cars in the world, not just because of the paycheck, but the sense pride they get in helping to build america. the question, how do we build on those strengths? everything i'm trying to do, and proposing for the next four years, in terms of improving the education system, developing american energy. or making sure we're closing loopholes for companies that are shipping jobs overseas. and focusing on small businesses

creating jobs here in the united states. we're closing our deficit in a responsible, balanced way that allows us to invest in our future. all those things designed to make sure that american people, their genius, their grit, their determination, is channeled and they have an opportunity to succeed. and everybody's getting a fair shot, and avenue's getting a fair share and playing by the same rules. you know, four years ago, i said that i'm not a perfect man, and i wouldn't be a perfect president, and that's probably a promise governor romney probably thinks i've kept. i also promised i would fight every single day on behalf of the american people, the middle class, and all those who are striving to get in the middle class. i've kept that promise, and if you will vote for me, then i promise i'll fight as hard in a second term. >> governor romney, two-minute closing. >> thank you, jim, mr. president.

thank you for tuning in this evening. this is an important election, and i'm concerned about america. i'm concerned about the direction america has been taking over the last four years. i know this is bigger than an election about the two of us. as individuals. it's bigger than our respective parties. it's an election about the course of america. what kind of america do you want for yourself and for your children? there are two very different paths we began speaking about this evening, and over the course of this month, we had two more presidential debates and a vice presidential debates, they lead in very different directions. and it's not just looking to our words to take evidence of where they go. you can look at the record. no question in my mind, if the president is re-elected will you see a middle class squeeze. with incomes going down and prices going up. i will get incomes up again. you will see chronic unemployment. we've had 43 straight months with unemployment above 8%. if i'm president, i had create -- help create 12 million new jobs in this country with rising incomes.

if the president is re-elected, obama care will be fully installed. in my opinion, that will mean a whole different way of life for people who counted on the insurance plan they had in the past. many will lose it. premiums will go up $2,500 per family. if i'm elected, we'll put in place the kind of principles i put in place in my own state, and allow each state to craft their own programs to get people insured and we'll get the cost of health care down opinion if the president were elected, you will see 4 million people who will lose medicare advantage, hospitals and providers that will no longer accept medicare patients. i'll restore the $716 million to medicare. and finally, military, the president is re-elected you'll see dramatic cuts to our military. the secretary of defense has said these would be even devastating. i will not cut our commitment to our military. i will keep america strong and get america's middle class